Monday, February 23, 2009

Cancel Student Loan Debt to Stimulate the Economy

President Obama just signed a $787 BILLION stimulus package on top of Bush's grossly mismanaged $700 BILLION TARP bailout from last September. While many parts of the stimulus bill will act to stimulate the economy, many parts of it simply won't. Tax rebate checks DO NOT stimulate the economy - history shows that people either spend such rebates on paying off credit card debt, or they simply save them, doing little to nothing to stimulate the economy.

The Wall Street financial institutions, auto manufacturers and countless other irresponsible actors have received BILLIONS of taxpayer dollars to bail them out of their self-created mess. This, too, does nothing to stimulate the economy. It merely rewards bad behavior and does nothing to encourage institutional change. There is a better way.

How many times have we heard from our leaders in Washington that education is the key to solving all of our underlying societal problems? The so-called "Silver Bullet." For decades, Presidents, Senators and Members of Congress have touted themselves as champions of education, yet they've done nothing to actually encourage the pursuit of one on an individual level.

Some of us have taken advantage of Federal Stafford Loans and other programs to finance higher education, presumably with the understanding that an advanced degree equates with higher earning power in the future. Many of us go into public service after attaining such degrees, something that's also repeatedly proclaimed as something society should encourage. Yet, the debt we've accrued to obtain such degrees have crippled our ability to reap the benefits of our educations, causing many to make the unfortunate choice of leaving public service so as to earn enough money to pay off that debt.

Our economy is in the tank. There isn't an economist alive who doesn't believe that the economy needs stimulating immediately. The only debate now centers on how to go about doing it. While the new stimulus plan contains some worthy provisions, very little of it will have a significant and immediate stimulating effect on the economy. The Obama Administration itself doesn't expect to see a upsurge in the economy until mid-to-late 2010.

Instead of funneling billions, if not TRILLIONS of additional dollars to banks, financial institutions, insurance companies and other institutions of greed that are responsible for the current economic crisis, why not allow educated, hardworking, middle-class Americans to get something in return? After all, they're our tax dollars too!

Forgiving student loan debt would have an IMMEDIATE stimulating effect on the economy. Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy NOW. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the plan presently under consideration. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created.

Let me be clear. This is NOT about a free ride. This is about a new approach to economic stimulus, nothing more. To those who would argue that this proposal would cause the banking system to collapse or make student loans unavailable to future borrowers, please allow me to respond.

I am in no way suggesting that the lending institutions who manage such debts get legislatively shafted by having these assets wiped from their books. The banks and other financial institutions are going to get their money regardless because, in addition to the $700 TARP bailout, more bailout money is coming their way (stay tuned!) - this proposal merely suggests that educated, hardworking Americans who are saddled with student loan debt should get something in return, rather than sending those institutions another enormous blank check. Because the banks will receive their money anyway, there would be no danger of making funds unavailable to future borrowers.

The new Obama Administration is supposed to be about change. Nothing in the new economic stimulus package represents a significant departure from the way Washington has always operated - it's merely a different set of priorities on a higher scale, but it's certainly not materially different from any other economic stimulus package passed during the past few decades.

Washington cannot simply print and borrow money to get us out of this crisis. We The People, however, can get this economy moving NOW. All we need is relief from debt that was accrued under the now-false promise that higher education equates with higher earnings.

Free us of our obligations to repay Federal Stafford Loans and WE, the educated, hardworking, middle-class Americans who drive this economy will spend those extra dollars NOW.

If you believe that there's a better way of climbing out of this economic crisis, one that empowers us to directly spend money, start businesses, free up credit and create jobs, then please join this group and encourage others to do so as well.

There's strength in numbers - the more people to join this group, the louder our voices and the greater the chances of being heard by President Obama and Congress.